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Written by Cyndie Martini
on June 09, 2016

It's crucial for credit unions to stay on top of trends and new technologies in order to continue to foster a healthy relationship with all of its members. Today's consumers have high expectations for their financial institutions, and it's very important for credit unions to deliver on these expectations.

The world is becoming increasingly more connected, and more people are using smartphones to accomplish everyday tasks. Now, everything from shopping to hailing a cab happens from a mobile device. Credit unions must make their presence easily accessible from this platform, and they must offer their members the capabilities they need to fit their lifestyle and goals.

One feature every credit union should be offering its members is a mobile wallet. People like using these devices for this reason, and will begin rapidly adopting them in the near future. A white paper from Javelin Strategy & Research predicted that mobile payments will reach $54 billion by 2019, a dramatic leap from the $7.3 billion in 2015, Bankrate reported.

Mobile wallets are secure, convenient and fast. As more people begin to adopt them, it's important that they are already provided the tools to allow them to do so. This means that credit unions should get ahead of the game and implement a mobile wallet strategy as soon as possible.

Know the options

PaymentsSource explained that for credit unions that want to take on a mobile wallet strategy, there are two main directions they can take: The mobile wallet can either be based on the device itself, or in the cloud.

The first option means the device manufacturer or network provider will largely be in charge of the mobile wallet. The second, however, gives the credit union much more autonomy in the development and evolution of the wallet.

The cloud-based wallet is made possible through Host Card Emulation. HCE has been endorsed by Visa and MasterCard, and connects the phone to remotely hosted servers, according to Sequent. It was released by Google through the Android KitKat operating system, which debuted in 2013. Card information and tokens are stored in the cloud, and provisioned at the time of request or transaction.

There is also a partial cloud option, which works just like HCE, but at periodic intervals, tokens are pushed to the device to be accessed should the user lose connection to the cloud.

A look at the benefits

The autonomy that credit unions gain when using HCE to develop a mobile wallet is close to priceless. It allows them to make changes as they see fit, or according to their members' preferences. It also allows them to brand or even co-brand their app how they wish.

A major concern with mobile wallets is security. A number of smartphones made today use biometric authentication to protect the data inside the phone from intruders. HCE provides one more layer of protection, as the card information and tokens themselves are not even on the phone until the user requests a transaction.

Sequent noted that nearly 85 percent of smartphone users choose Android devices, so HCE will be able to reach the majority of consumers. HCE uses NFC technology, which many of today's terminals have after the EMV switch implemented last year. This means consumers with a mobile wallet that employs HCE will be able to use their wallet at many of their favorite stores.

PaymentsSource pointed out that, as mobile wallets become more popular and as more technologies are produced to incorporate them, cards will gradually become obsolete. Mobile wallets will even be able to be used with ATMs to withdraw cash eventually.

Credit unions that jump on this trend today will gain more early adopters, and will look like experts when the majority of their member base decides to begin using mobile wallets.


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